In the last months we have seen, discussed and reflect about the different strategies’ governments have implemented in different timings to cope with the pandemic: lockdowns, regulations about facemasks, closure of non-essential activities, mobility restrictions, schools’ closure, etc. The efficacy of these strategies depends on different parameters such as the spread of the virus, the assistance capacity in hospitals, the capacity and strategy for testing and searching, people’s behaviour, etc. That’s is why, despite being a global pandemic its impact is asymmetric from one territory to another.

The concept of resilience, which is the core concept of our last Competitiveness Report, has been widely adopted by the economic geography scholars to understand why some regions are more able to cope better with economic shocks. The response is on the evolutionary concept of resilience, which is understood by capability of territories to resist, adapt, respond and/or recover from a shock. This capability is different from one territory to another and depends on several factors, such as history or past regional trajectories, industrial specialisation or the public policies implemented before, during and after the shock. Thus, previous policies conditions current vulnerability, policies implemented during the emergency condition short-term resilience and medium-long term-oriented policies shape future resilience.

In a report that has been recently published, we analyse regional policy measures implemented during the first emergency phase of the pandemic by regional governments in three regions with similar structural characteristics, including industrial specialisation: the Basque Country, Baden-Wurttemberg and Upper Austria. During that time restrictions were different in the three regions, being more severe in the Basque Country than in the other two regions, which shaped the immediate economic impact with higher negative impact on the GDP growth and Industrial Production Index in the Basque case. However, we found that short-term policy measures where similar in the three regions, aiming to inject liquidity to SMEs and support digital transformation for companies to continue their activity. Does this mean that context doesn’t matter in the pandemic? In order to answer this question, we should also incorporate the medium-long term perspective of resilience.

Policy measures implemented during these last months have been directed to cope with the immediate economic recession provoked by the mobility limitation, and therefore they are similar from region to region. However, policy measures for recovery will require ad hoc regional strategies that consider regional specificities and assets. The European Commission has launched a recovery strategy (Next Generation EU) based on a green, digital and fair transition and conditions European recovery funds to the alignment towards these areas. Whereas the Member States are the ones designed to apply for these funds and present their own projects, regional initiatives should be included at the core of these strategies, as it is at the regional and local context where projects will be implemented. It is here where co-governance mechanisms make the difference as a fluent and coordinated national-regional response is needed in order not only to get funds, but to contribute to the green and digital European missions.

Projects, initiatives and innovation for recovery will therefore come from regions. The most resilient regions (those that will recover faster and better) will be those that take digital and green transitions as a window for opportunity to reorient and transform their economy. Medium-long term policy measures should therefore be oriented towards this goal, according to regional assets. In this realm, industrial and innovation policy can play a key role for developing new innovative activities and businesses oriented towards transitions. Regions could build on their previous Smart Specialisation Strategies (S3) as they are policies that incorporate some of the key elements needed for a recovery based on transitions:

1. Directionality
2. Experimentation at the core of Entrepreneurial Discovery Process, where actors from the quadruple helix define and prioritise innovation investments with transformative potential.
3. Governance model that incorporates multiple levels and actors

However, S3 needs to advance in regions to face the complexity of these transitions’ challenges by 1) incorporating digitalisation and sustainability as main lines of directionality; 2) going beyond traditional experimentation through innovation projects and including more a user voice in the entrepreneurial discovery process; 3) working within and outside the region, including interregional cooperation projects to scale up experiments and contribute to the European mission.

Are all the regions in the same point of departure? My answer is no. There are regions in which digitalisation and sustainability were already part of their S3, as for example the Basque Country, where specific industrial and technological assets have been developed in the last years in the area of energy, or industry 4.0 for example, building from a long term trajectory of industrial and energy policies. Therefore, the Basque region has the roots for directionality towards transitions. In addition, one of the main assets of the Basque Country is the strong culture of cooperation and coalitions. As a reflection of this we can mention the long trajectory of the Basque cluster policy, that can also be a driver for transitions.

Summarising, despite being a global pandemic, regions and regional context matter for medium-long term recovery.

edurne magro

Edurne Magro

Edurne Magro is a Senior Researcher at Orkestra-Basque Institute of Competitiveness. She holds a Ph.D. in Business Competitiveness and Economic Development with a European Mention from the University of Deusto, after having spent time at the Manchester Institute of Innovation Research of the University of Manchester, United Kingdom. She holds a degree in Business Administration and Management and has a Master in Innovation and Technology Management from the University of Deusto..

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